Podcast Summary
Businesses offering high-quality experiences alongside services redefined industries in the 2010s: Understanding the fusion of services and experiences in business can lead to valuable investing opportunities in the evolving landscape, as consumers continue to prioritize experiences over functional transactions.
The 2010s economy saw the rise of businesses that offered high-quality experiences alongside services, such as dry bars that provided blowouts and cocktails. This fusion of services and experiences redefined industries and catered to consumers' desire for more than just functional transactions. Principal Asset Management, with its 360-degree perspective and expertise in public and private equity and debt, helps identify compelling investing opportunities in this ever-evolving business landscape. The desire for experiences remains a significant trend, and understanding the past and present business conditions that shape it can provide valuable insights for the future. On a lighter note, don't forget to send in your questions for the Ask Me Anything episode on Odd Lots podcast by December 13th.
Starting a business comes with personal sacrifices: Allison Levine's journey growing Drybar despite personal challenges emphasizes the importance of sharing raw stories and identifying market gaps
Building a successful business can come with personal sacrifices. Allison Levine, the founder of Drybar and author of "The Messy Truth," shares her experience of growing her business while dealing with personal challenges such as divorce, rehab, and depression. She emphasizes that entrepreneurs often lose sight of their personal lives while focusing on their business, which can lead to feelings of isolation and even loss of self. Despite these challenges, Levine's book has resonated with many people, highlighting the importance of sharing raw and relatable stories in public content. When starting Drybar, Levine identified a gap in the market for an affordable and convenient blow-dry bar. With her background as a hairstylist, she intuitively knew that there had to be a better way to get a blowout than the discount chains or expensive salons. Drybar's concept of drop-in blow-dries became a game-changer in the industry, and the business has since grown beyond the brand, with people now associating the term "Drybar" with a hair salon that offers affordable and quick blow-dries.
Expanding a Successful Business: Seeing the potential in a successful concept, Drybar's team took risks to expand and deliver results, leading to significant growth and personal success.
Alli Webb's mobile blowout business experience served as the foundation for Drybar's success. Realizing the high demand for affordable luxury hair services, she made the decision to expand and grow the business into a national brand, despite the personal and financial risks involved. The success of Drybar's first few stores wasn't enough to sustain the desired growth rate, leading the team to raise capital to expand further. The decision to go big and deliver results changed their lives significantly. Many businesses opt for a slower, organic growth pace, but Drybar's team saw the immense potential in their concept and chose to seize the opportunity.
Growing a Business Quickly in a Competitive Industry: Secure initial funding from friends and family, focus on volume to keep costs low, and expand through formal investment processes. Recognize the demand for volume in women's hair and prioritize growth to establish market presence.
In order to grow a business quickly and successfully, particularly in a competitive industry, it's essential to move fast and raise capital. The speakers in this discussion did just that, using friends and family as initial investors, and later securing larger investments through formal processes. They focused on volume to keep costs low and margins thin, recognizing that women desire volume in their hair. However, they faced challenges in securing a reliable supply of skilled hairstylists, which impacted their ability to meet demand. Despite these challenges, their strategy of prioritizing volume and growth paid off, allowing them to expand their business and establish a strong market presence.
Flexible scheduling and top-notch training for hairstylists: Drybar's success hinged on hiring and training the right hairstylists, offering flexible schedules, and investing in a rigorous training program to ensure consistent, high-quality blowouts.
For Drybar's business model to succeed, recruiting and training the right hairstylists was crucial. The company had to be flexible with stylists' working hours due to the labor-intensive nature of the business. Some stylists preferred longer shifts, while others could only work for a few hours. In the early days, the founder even took on the role of a stylist herself to accommodate the staffing needs. However, ensuring the stylists were top-notch was also a challenge. While some had years of experience and required minimal training, others were new and needed more attention. The lack of proper training was causing issues, as the quality of blowouts was a priority for the brand. Building a robust training program took time, but it was essential to maintain the desired culture and consistency in the shops.
Identifying cultural fit during hiring process: Assessing personality and motivation for service industry roles can lead to committed talent and positive work culture
Identifying and retaining committed talent is crucial for the success of any business, especially in the service industry. Ally Webb, the founder of Drybar, emphasized the importance of cultural fit during the hiring process. This involved having pre-interviews to assess a potential employee's personality and motivation for being in the service industry. Webb believed that those who enjoyed making people feel good and sharing their talent with others would thrive in the fast-paced and challenging environment of her salons. As Drybar grew, these cultural interviews became essential for ensuring a consistent and positive work culture. The lessons learned from Webb's experience can be applied to entrepreneurs and hiring managers across various industries, particularly during the current era of higher labor turnover.
The importance of passion and enthusiasm in entrepreneurship: Passionately loving what you do and being excited about your brand and company leads to a successful business, attracting the right team and resonating with customers. Money should not be the primary driver, instead, focus on creating something you love and providing opportunities for others.
Passion and enthusiasm are essential for entrepreneurs looking to build a successful business. The speaker emphasizes the importance of having a deep love for what you do and being genuinely excited about your brand and company. This intangible quality is crucial for attracting the right team and creating a business that resonates with customers. Furthermore, the speaker shares that money should not be the primary driver for entrepreneurs. Instead, focusing on creating something you love and providing opportunities for others can lead to greater rewards and success. The speaker's personal experience of building a successful business without initially considering monetary gains is an example of this approach. Lastly, the speaker acknowledges that striking a balance between investing in the business and rewarding oneself can be challenging. However, they believe that prioritizing passion and love for the business can lead to greater success and fulfillment in the long run.
Starting a business out of passion: Follow your passion and belief in your business, even when faced with skepticism from investors, can lead to success
Starting a business out of passion and love for what you do is more valuable than the financial success it may bring. Allison, the founder of Drybar, shared her experience of building her business from a small shop to a successful franchise, driven by her passion and dedication. However, she faced challenges when trying to explain her business model to investors, particularly those unfamiliar with physical growth locations. The retail industry was in a tough phase during that time, making it difficult for investors to predict the success of a business like Drybar. Despite these challenges, Allison's initial goal was to raise only $10-15 million, but ended up raising $25 million from private equity firms. The success of Drybar and the buzz it generated helped convince investors, even if they initially didn't fully understand the business model. Ultimately, the success of Drybar demonstrates the importance of following your passion and believing in your business, even when faced with skepticism from investors.
Identifying a gap in the market and creating a unique experience: Noticing a need for improvement in an industry and offering a personalized solution can lead to a successful business venture.
Identifying a gap in the market and creating a unique experience can lead to successful business ventures. Allison and her brother, who were behind the popular dry bar concept, noticed a similar issue in the massage industry. Michael, being a bald man who never got blowouts, was frustrated with the lack of quality and convenience in massage services. The brothers, along with their co-founder Brittney Driscoll, saw an opportunity to create a better massage experience at an affordable price point. The key differentiator for their new business, Squeeze, is an intuitive app that allows customers to customize their preferences for a more personalized massage experience. Despite the challenges of starting a new business, the team's shared vision and determination led them to find the right partner in Castaneda (now known as Stride) and eventually, Squeeze.
A new massage app and franchise, Squeeze, uses advanced technology and intuitive app experience to differentiate itself and expand with over 80 locations sold.: Squeeze, a new massage app and franchise, uses tech and intuitive app experience to stand out, expanding with 80+ locations, focusing on convenient, easily accessible areas for women.
Squeeze, a new massage app and franchise, differentiates itself through its advanced technology and intuitive app experience, which allows therapists to prepare for each session beforehand based on client information. The founding team, which includes members from Drybar, saw the success of that business model in the beauty industry and aims to replicate it in the massage industry. With over 80 locations sold across the country, Squeeze plans to expand further. When it comes to selecting locations, the team looks for areas that are part of a woman's daily routine, such as near grocery stores, workout facilities, or favorite shopping areas. Understanding the unique nuances of each neighborhood, including parking and accessibility, is crucial for success. Despite the uncertainty surrounding the future of work, the team believes that experiences will become increasingly valuable, and Squeeze aims to provide a convenient and high-quality massage experience in easily accessible locations.
Placing businesses near popular retailers and services for women's convenience: Successful businesses strategically locate near other popular retailers and services for women's convenience, but entering new markets presents unique challenges.
Strategic location is crucial for the success of a business, particularly for those that cater to women and offer convenience. Drybar's founders deliberately placed their blowout bars near other popular retailers and services, such as Barnes and Noble, Ulta, and Whole Foods, to make it easy for women to visit multiple places in one trip. This strategy also applied to Squeeze, their massage concept. However, entering new markets, like New York City, presents unique challenges, such as higher real estate and construction costs, and competition from established and less desirable businesses. Landlords and mall tenants often have stipulations in their leases that restrict certain types of competitors from moving in, adding another layer of complexity to finding the right location. Overall, the ability to adapt and be creative in finding the right location is essential for any business looking to thrive.
Identifying a unique service in a changing economy: During economic downturns, focusing on a unique service, adapting to labor market changes, and smart location selection can lead to a successful business.
During the 2010s economy, Drybar, a blow-dry bar chain, successfully identified a service that people were willing to pay for in person despite the competition from online shopping and the downturn of brick-and-mortar retail. Founder Alli Webb also tapped into the emerging trend of gig work, allowing customers to book appointments for 2 or 4 hours instead of a full-time position. Webb's ability to choose convenient locations, such as malls' perimeters with easy parking access, contributed to the brand's success. The art of location selection for a brand is an interesting topic that could be explored further, and observing strip malls and commercial real estate could provide valuable insights. Drybar's story highlights the importance of offering a unique service, adapting to labor market changes, and smart location selection in building a successful business.
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